What if the best companies disappear, or never list?

Don't be fooled by SpaceX's mega-listing and the possibility that Anthropic and OpenAI will follow suit. No, public markets are shrinking, and they have been for some time. Companies are staying private for longer and, increasingly, opportunities are moving off-exchange.

2,317: Remember that number - it's important. It's the historical peak of companies listed on the ASX, as of June 2022. Today's number? Around 2,080 (it's hard to pin down the exact figure, given that it changes frequently). That equates to 234 companies, representing an approximately 10% decline.

Some of the companies we've lost in recent years include Westfield, DuluxGroup, Healthscope, Bellamy's, Oil Search, Afterpay, Sydney Airport, Nearmap, Blackmores, Costa Group, Adbri, CSR, Altium and InvoCare.

The numbers are even more alarming in the US. Whilst US companies have disappeared at about the same clip as in Australia over the past decade, over the past three decades a staggering 45-50% of companies have evaporated. 

What about new entrants? Well, global IPOs fell 22% from 2020 to 2024, while in Australia, the value raised through IPOs slid to A$4.2 billion in 2024, from A$22.9 billion a decade earlier. At the same time, global M&A involving private capital jumped 54% in 2025, to around US$1.2 trillion.

So why are there fewer public companies?

Whatever the reasons, ultimately public markets are shrinking while private markets are capturing a greater share of corporate value creation.

That is the backdrop for Livewire's Focus on Private Equity series. Over the coming week, we will look past the caricatures and into the mechanics - what private equity does well, where it can go wrong, why investors continue to allocate to it, and why the next phase of the asset class looks promising without looking easy.

If public markets are the shopfront, private equity is the stockroom - less visible, harder to access, and often where the real work of building a business gets done.

The world got more private

One simple reason private equity matters more today is that a growing share of economic value is being created away from the exchange.

That shift is now reflected in the corporate landscape itself. According to Scarcity Partners, around 90% of US companies generating more than US$100 million in annual revenue are privately owned, rising to 95% in Europe and 85% across Asia-Pacific.

Public markets still matter enormously, but they no longer have a monopoly on growth, innovation or corporate ambition.

McKinsey says private capital's share of global M&A rose to roughly 26% in 2025, while dry powder remained elevated at about US$2 trillion. In Asia-Pacific, Bain says exit value rose 24% in 2025 and net cash flow to limited partners turned positive by the third quarter for the first time since 2021.

Bain's latest global data tells a similar story. Global buyout deal value rebounded 44% in 2025 to US$904 billion - the second-highest year on record - even as deal count slipped 6%, suggesting sponsors are pursuing fewer but larger transactions. Australia sits inside that broader shift.

Beyond Australia, many managers see Asia as one of the most compelling long-term opportunity sets. Despite generating around 60% of global GDP growth, Asia attracts less than 3% of global private equity fundraising, according to Private Equity International. 

Rapidly expanding middle-class wealth - particularly in India - is expected to underpin private market opportunities across healthcare, technology, consumer businesses and financial services for decades.

Ownership beats spectatorship

At its best, private equity offers something public markets struggle to replicate - time, control and concentrated effort.

Rather than owning a sliver of a business and hoping management gets it right, private equity ownership is built around influence. As EQT's Frank Heckes told Livewire, modern private equity is about "active ownership" and long-term value creation, not simply benefiting from lower rates or rising multiples.

That becomes especially powerful in founder-led and family-owned businesses, where the next chapter often requires more than capital.

Claire Smith of Schroders told Livewire that in small- and mid-market buyouts, roughly 60% to 70% of deal flow comes from founder-led or family-owned businesses, where value can be created through professionalisation, international expansion, bolt-on acquisitions, and better systems.

She also argued the supply-demand equation remains compelling: around 70 cents of every private equity dollar flows into large-cap private equity, despite those businesses representing only around 1% of companies by number. Small and mid-market companies account for the other 99%.

That is why private equity so often shows up in software, healthcare, services and education. 

These are sectors where recurring revenue, sticky customers, proprietary data and operational improvements can matter more than financial engineering.

The edge is in execution

If the last cycle flattered many participants, the next one looks more selective.

McKinsey's 2026 Global Private Markets Report is blunt. The old tailwinds of falling rates, abundant leverage and expanding multiples have passed. Future outcomes will depend more on asset selection, operational value creation, leadership, AI readiness and liquidity management. In other words, alpha will need to be earned.

That view lines up neatly with what we heard from Lonsec's Darrell Clark.

"Managers who can genuinely add value are the ones who are going to come to the fore."

Bain's latest Asia-Pacific data backs that up. Top-quartile funds from the 2017 to 2019 vintages generated IRRs of 22% to 24%, while the gap between top and lower-performing managers has continued to widen.

The same Bain data shows Asia-Pacific buyout funds continued to outperform public markets over 10- and 20-year horizons as of the third quarter of 2025, even if strong public markets have narrowed that gap over shorter periods.

That may be the most important point for investors. Private equity is not one thing. It is a universe. Returns can be excellent, but dispersion is real, and access alone is not an investment thesis. Manager selection is not a detail in private equity, it is the product.

Friction is part of the bargain

None of this works as an honest introduction unless we deal with the drawbacks.

Private equity is less liquid, less transparent, harder to benchmark and often more expensive than listed equities. 

Holding periods have stretched to around six years globally, and the industry is still working through a historically large inventory of unsold companies.

Reuters, citing Bain, reported there were approximately 29,000 private-equity-backed companies worth US$3.6 trillion sitting in portfolios at the end of 2024.

Regulators are paying attention. In Australia, ASIC has said private markets raise questions around opacity, conflicts of interest, valuation uncertainty, illiquidity and leverage. 

Chair Joe Longo has been explicit that the regulator does not want to be "in the dark" on a part of the market that is becoming increasingly important to the economy and to superannuation capital. Investors should pay attention, too. As Darrell Clark put it:

"Liquidity ... is not a guarantee."

That does not make the asset class flawed. Private equity can be a powerful long-term allocator of capital, but it is a poor place for money you may need back quickly. 

It becomes dangerous when sold as a simple yield product or volatility suppressant rather than what it really is: illiquid equity risk paired with operational ambition.

Better conditions, tougher terrain

So where are we now? Better than a year or two ago, but not back to the old playbook.

Global dealmaking has reopened. IPO markets are functioning again. Asia-Pacific exits are improving. Bain says 88% of Asia-Pacific GPs expect returns to hold steady or improve over the next three to five years, up from 61% in 2023. 

Globally, private-equity-backed exit value rose 47% during 2025, with IPO exits increasing 36%, according to Bain, suggesting long-awaited liquidity is gradually returning to the asset class.

McKinsey says 2026 looks attractive for sponsors seeking exits through trade sales, IPOs and secondary transactions.

There are local reasons to watch the space closely as well. Australia's giant superannuation pool continues to grow, and some of its largest allocators want more private equity, not less.

The Financial Times reported last year that AustralianSuper planned to lift its private equity allocation from 5% to 8% by 2030, potentially taking that portfolio to between A$35 billion and A$40 billion.

The upshot is that private equity enters this series with momentum, but also with a higher burden of proof. The easy-money era appears to be over. What comes next should favour managers who can source well, govern well, improve businesses and exit with discipline.

For investors, that is both the appeal and the challenge. Private equity is no silver bullet. But if public markets are giving investors fewer opportunities to access growth early, private equity is becoming harder to ignore.